Skaf v. Wyo. Cardiopulmonary Servs.
| Decision Date | 27 September 2021 |
| Docket Number | S-20-0266 |
| Parties | MICHEL SKAF, M.D., Appellant (Defendant), v. WYOMING CARDIOPULMONARY SERVICES, P.C., a Wyoming corporation, Appellee (Plaintiff). |
| Court | United States State Supreme Court of Wyoming |
Appeal from the District Court of Natrona County The Honorable Daniel L. Forgey, Judge
Representing Appellant: Weston W. Reeves and Anna Reeves Olson, Park Street Law Office, Casper, Wyoming. Argument by Mr. Reeves.
Representing Appellee: Frank R. Chapman and Patrick Lewallen Chapman Valdez & Lansing, Casper, Wyoming. Argument by Mr. Lewallen.
Before FOX, C.J., and DAVIS * , KAUTZ, BOOMGAARDEN, and GRAY, JJ.
* Chief Justice at time of oral argument.
[¶1] Dr. Michel Skaf is a cardiologist who signed an agreement not to compete when he became a shareholder in Wyoming Cardiopulmonary Services (WCS). He appeals from the entry of a judgment confirming an arbitration award for breach of the agreement, and a second judgment requiring additional payment. The Arbitration Panel (the Panel) concluded that the parties' non-compete agreement was enforceable if modified significantly. Before awarding damages, the Panel reformed the provision prohibiting medical services, modified the geographical scope of the agreement, and rewrote the clause allowing Dr. Skaf to practice medicine at the Wyoming Medical Center. The district court confirmed the Panel's decision, entered a total judgment of $221, 000 in favor of WCS, and denied WCS' request for an injunction.
[¶2] Dr. Skaf claims the Panel erred in enforcing the agreement because a non-compete agreement between physicians is against public policy, and the Panel made a manifest error of law when it ignored Wyoming's clear public policy against restraint of trade.
[¶3] WCS filed two motions to dismiss this appeal which we took under advisement. The first motion claims Dr. Skaf's employment contract waived his right to appeal the district court's confirmation of the Panel's decision. The second motion claims Dr. Skaf lacks standing.
[¶4] WCS' motion to dismiss for lack of standing is denied. We also deny WCS' motion to dismiss based on waiver and decline to declare covenants not to compete between physicians necessarily violate public policy. Finally, we find the Panel made a manifest error of law and reverse the confirmation of the Panel's decision, vacate the award and remand this matter to the district court.
[¶5] The issues are:
[¶6] In 2004, Dr. Skaf entered into an employment agreement with WCS. In 2009, Dr. Skaf and WCS negotiated a new employment agreement (the Agreement) when Dr. Skaf became a shareholder in WCS. Dr. Skaf received a substantial increase in salary at that time. The Agreement contained a covenant not to compete. The non-compete clause reads:
11.1 Covenant Not to Compete. As an essential part of this Agreement, Employee covenants with Employer that if Employee's employment with Employer terminates for any reason, Employee will not practice medicine for a period of two years following termination of employment within a 100-mile radius of Casper, Wyoming, and each outreach clinic of Employer.[1] This covenant will apply to Employee whether he engages in the subsequent practice of medicine in an individual capacity, as an employee of another concern, or as a principal of a partnership, corporation, or other entity. Notwithstanding the foregoing, this provision is not intended to, nor will it be construed as, limiting in any way Employee's right to have hospital privileges or to perform medical procedures at Wyoming Medical Center, Casper, Wyoming.
The Agreement also included a provision establishing liquidated damages. The provision required a minimum payment of $1, 000 for any WCS patient Dr. Skaf treated within two years from separation from WCS. All claims arising from the Agreement, except claims for injunctive relief, were subject to arbitration, and the parties expressly waived the right to appeal any arbitration judgment entered by the district court.
[¶7] In 2015, WCS terminated Dr. Skaf for cause. Despite the non-compete provision, Dr. Skaf immediately set up his own practice in Casper where he provided cardiology services to patients, including former WCS patients. WCS filed a complaint, a motion seeking an injunction, and a motion to compel arbitration. The motion to compel arbitration was granted, and the motion for an injunction was stayed until the arbitration process concluded.
[¶8] After extensive discovery and two hearings, the Arbitration Panel found that the covenant not to compete was enforceable once it modified the scope of the prohibited services and limited the geographic area. It rewrote the Agreement as it related to Dr. Skaf's privileges to practice at the Wyoming Medical Center.
[¶9] WCS filed a motion in district court to confirm the award and requested a permanent injunction. The district court confirmed the Panel's decision to enforce the covenant not to compete and entered judgment of $193, 000-$1, 000 for each of the 193 WCS patients treated by Dr. Skaf. WCS then filed a motion to modify the award, and the court ordered the Panel to reconvene to address former WCS patients treated by Dr. Skaf who were not discovered prior to the original arbitration. The Panel found Dr. Skaf had treated an additional 28 patients and awarded WCS $1, 000 for each of these patients. The district court entered a second judgment of $28, 000 and denied the motion for an injunction. This appeal followed.
[¶10] Dr. Skaf presents three public policy arguments in his appeal. First, he argues public policy prohibits a pre-dispute appeal waiver, relying on revisions to the Uniform Arbitration Act. Next, he asserts a non-compete agreement between physicians is a violation of public policy, and always unenforceable, as a matter of law. Finally, he contends that the Panel's decision should be vacated because it rests on a manifest error of law-that the non-compete agreements are strongly favored in Wyoming, and their enforcement promotes public policy. We first address WCS' motion to dismiss for lack of standing and then separately review the three remaining issues based on Dr. Skaf's public policy arguments.
[¶11] WCS claims Dr. Skaf has no standing to bring this appeal because he has never stopped practicing medicine; he was not enjoined from doing so; and he has not suffered a concrete and particularized injury. "The question of standing is a legal issue that we review de novo." In re Est. of Johnson, 2010 WY 63, ¶ 4, 231 P.3d 873, 876 (Wyo. 2010). WCS' argument rests on the first factor of Wyoming's long-established test for standing articulated in Brimmer v. Thomson-a justiciable controversy. A justiciable controversy requires "existing and genuine, as distinguished from theoretical, rights or interests." Allred v. Bebout, 2018 WY 8, ¶ 37, 409 P.3d 260, 270 (Wyo. 2018) (quoting Brimmer v. Thomson, 521 P.2d 574, 578 (Wyo. 1974)); HB Fam. Ltd. P'ship v. Teton Cnty. Bd. of Cnty. Comm'rs, 2020 WY 98, ¶ 18, 468 P.3d 1081, 1088 (Wyo. 2020). [. Halliburton Energy Servs., Inc. v. Gunter, 2007 WY 151, ¶ 11, 167 P.3d 645, 649 (Wyo. 2007) (quoting Sinclair Oil Corp. v. Wyoming Pub. Serv. Comm'n, 2003 WY 22, ¶ 13, 63 P.3d 887, 894-95 (Wyo. 2003)). The district court confirmed two money judgments against Dr. Skaf, one for $193, 000 and a second for $28, 000. These judgments result in perceptible harm. Dr. Skaf has standing.
[¶12] In a separate motion to dismiss, WCS argues we lack jurisdiction because the Agreement contains a valid waiver of appeal from the district court's entry of judgment after arbitration. Dr. Skaf responds that a waiver of appeal is void if made prior to a dispute requiring arbitration, as a violation of public policy. WCS submits the waiver is enforceable as it does not waive all judicial review, but only the right to an appeal from judgment on arbitration entered by the district court.
[¶13] "While the question of waiver is often one of fact, when the facts and circumstances relating to the subject are admitted or clearly established, waiver becomes a question of law which we consider de novo." Verheydt v. Verheydt, 2013 WY 25, ¶ 21, 295 P.3d 1245, 1250-51 (Wyo. 2013). The waiver in this case is contained in the Agreement. "The interpretation and construction of contracts is a matter of law for the courts" and is reviewed de novo. Hoecher v. Runyan, 2001 WY 39, ¶ 11, 21 P.3d 339, 342 (Wyo. 2001).
[¶14] "We have defined waiver as the intentional relinquishment of a known right[2] that must be manifested in some unequivocal manner." Jensen v. Fremont Motors Cody, Inc., 2002 WY 173, ¶ 16, 58 P.3d 322, 327 (Wyo. 2002). "[T]he three elements of waiver are: 1) an existing right; 2) knowledge of that right; and 3) an intent to relinquish it." Id.
[¶15] The Agreement provides:
Except as provided in Paragraph 20 [], all disputes, controversies, claims or demands of any kind or nature arising between the parties in connection...
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